Pay & Benefits

This metric is crucial for assessing the overall effectiveness of an

organization's compensation strategy and ensuring that it aligns with
business objectives, industry standards, and the needs of the workforce.
 Annual Base Salary Increase (ABSI)
Metric that reflects the percentage increase in base salaries from one period to
another, typically measured on an annual basis. This metric is important for
organizations to assess and adjust employee salaries in line with market trends,
inflation, and overall business performance.
ABSI %= Targeted Base Salary after Increase x 100
Current Base Salary

ABSI % = 52,000 x 100 = 104%

50,000
Target Bonus for Non-Executives
Predetermined, usually annual, bonus amount that is set as a percentage
of an employee's base salary. This bonus is often used as an incentive to
motivate and reward non-executive employees for their performance
and contributions to the organization's success.
Bonus%= Target Bonus x 100
Base Salary

Bonus% = 6,000x 100 =

12%
50,000
Target Bonus for Executives
Predetermined, usually annual, bonus amount that is set as a percentage
of an employee's base salary. This bonus is often used as an incentive to
motivate and reward executive employees for their performance and
contributions to the organization's success.
Bonus%= Target Bonus x 100
Base Salary

Bonus% = 6,000x 100 =

12%
50,000
Compensation Ratio and Avg Compensation Ratio
The average compensation ratio is a measure that provides insight into
the overall alignment of employee salaries with the midpoint or
reference point of their respective salary ranges across an entire
organization.
Avg Compensation Ratio = Sum of Compensation Ratios .
Number of Employees

Avg Compensation Ratio = 0.769 + 0.993 + 0.956 . =

0.906
3
Total Compensation Spend Rate
The Total Compensation Spend Rate is a metric that helps organizations
evaluate the proportion of their total budget allocated to employee
compensation, including both direct and indirect costs
Total Compensation Spend Rate= Total Compensation Cost . X 100
Total operating Cost

= 50,000 . = 1.666%
30,000,000

The sum of all costs associated with employee compensation includes

base salaries, bonuses, benefits, payroll taxes, and any other forms of
remuneration.
 Compensation Ratio
Direct Compensation Ratio - The direct compensation ratio is defined Direct: as the
relationship of direct pay to the midpoints of the salary ranges.
Direct Compensation Ration = Direct Compensation
Pay Range Midpoint
-> Direct Compensation includes - base pay + Direct: differential pay + short &
long term incentive pay + cash awards
Indirect Compensation Ratio - The indirect compensation ratio is Indirect: defined
as the relationship of indirect pay to the midpoints of the salary ranges.
Indirect Compensation Ration = Indirect Compensation
Pay Range Midpoint
-> Indirect Compensation includes legally required benefits + disability + medical,
dental, life, vision insurance + pay for time not worked + unpaid leave + flexible
benefits + non-cash awards
Benefit Participation Rate
The Benefit Participation Rate is a metric that measures the percentage
of eligible employees who enroll in and actively participate in the
various employee benefit programs offered by an organization.
Employee benefits can include health insurance, retirement plans, life
insurance, disability coverage, and other perks or wellness programs.

Benefit Participation Rate = No of Employees participating in Program x 100

No of Employees eligible for Program
= 450 x 100 = 90%
500
Benefits Spend Share
Benefits Spend Share is a metric that indicates the portion of an
organization's total compensation costs dedicated to providing employee
benefits.
Benefit Spend Share = Total Benefit Cost x100
Total Compensation Cost
= 24,000 + 35,000 + 200,000 x 100 = 62%
420,000

Salary per Anum 420,000

Mobile Allowance per Anum 24,000
OPD Compensation 35,000
IPD Compensation Limit 200,000
Total of Benefit 259,000
 Annual Change in Benefits Spend
The rate increase/decrease in an organization’s benefits spend vs. a
comparator, e.g., prior time period, target or projection.

Annual Change in Benefits Spend = Current benefits spend – Comparator Spend x 100
Comparator Spend
= 259,000 – 220,000 x 100 = 18%
220,000
Health Care Spend Rate
Average cost of providing health care to enrolled employees
Health Care Spend Rate = Total health care expenses
Number of Employees enrolled in a Health Care plan.

Organization Share of Health Care Premiums

The percentage of health care premiums paid by the organization.
Org Share of HC Premium = Employee-only coverage premiums paid by organization
. Total Premiums